Federal Register, Volume 74, Number 76, April 22, 2009, Pages 18285-18448 Page: 18,327
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Federal Register/Vol. 74, No. 76/Wednesday, April 22, 2009/Proposed Rules
distort market conditions for any
covered wholesale petroleum product?
For example, should it be sufficient
simply to show that the informative
content of a misleading statement is of
the type typically absorbed by the
market and incorporated into market
prices? Explain.
u. Is it clear that a violation of revised
proposed Rule Section 317.3 does not
require that the violator possess market
power-and need not have reduced
competition-in a relevant antitrust
market, as these concepts are defined by
antitrust legal precedent? Why or why
not? If not, how could the language be
revised to make clear that neither a
showing of market power nor a
reduction in competition is an element
of proof?
v. Consider the following alternative
rule language:
It shall be unlawful for any person,
directly or indirectly, in connection
with the purchase or sale of crude oil,
gasoline, or petroleum distillates at
wholesale, to engage in any act
(including the making of any untrue
statement), practice, or course of
conduct with the intent* to defraud or
deceive, provided that such act,
practice, or course of conduct distorts or
tends to distort market conditions for
any such product.
* The phrase "with the intent" shall
mean that the alleged violator intended
to mislead-regardless of whether he or
she specifically intended to affect
market prices (e.g., specific intent), or
knew or must have known of the
probable consequences of such
conduct-and regardless of whether the
conduct was likely to succeed in
defrauding or deceiving the target.
Would this alternative language better
achieve (or would it not better achieve)
the goals of Section 811 of EISA than
the revised proposed Rule discussed in
this Notice. Explain. Discuss the merits
or flaws, if any, of this alternative
language?
w. Hypothetical questions:
(1) Company ABC reports a trade to
the XYZ Price Service, a service that
collects transactional data and uses the
data to set a benchmark price that the
industry uses to negotiate spot
purchases of refined product. XYZ
procedures, which are well known
throughout the industry, require
reporting companies to identify
transactions below a specified volume
to limit the impact of transactions with
inconsequential volumes on the
benchmark price. The volume of ABC's
trade is below the specified volume, but:
(a) ABC inadvertently omits thatinformation.
(b) ABC establishes procedures to
ensure that persons reporting
transactions know to identify
transactions below the specified amount
but the individual reporting this
transaction fails to follow those
procedures.
(c) ABC intentionally omits the
information identifying the trade.
(2) Trader A receives a request from
RST Refinery for crude oil of a
particular grade, specifying that it
prefers not to buy crude from the
country of Cepo for political reasons.
Trader A is unable to find the kind of
crude RST requires except in Cepo.
Trader A:
(a) Sells the crude from Cepo to RST
without disclosing that it is from Cepo.
(b) Sells the crude to RST and
represents that it is from the country of
West Friendly, knowing that it is from
Cepo.
(c) Does not know and does not ask
where the crude is from and sells it to
RST without representing its origin.
Applying (1) the revised proposed
rule language appearing in this Notice
and (2) the alternative rule language
appearing above in Question 2v. to the
facts provided in these hypothetical
examples, discuss differences, if any, in
the outcome of an enforcement action.
Which result would be more desirable
and why? Also speak to the
effectiveness and ability of each rule
version to reach any harmful
manipulative conduct contained in the
fact pattern, the relative burdens on the
Commission to enforce the rule
successfully, and the relative risks of
enforcement error.
3. Regulatory Flexibility Act
The Commission requests that
commenters provide information about
the potential scope and economic
impact of the revised proposed Rule so
that the Commission may better assess
the economic impact of the language of
any final rule if it determines to publish
such rule. Specifically, the Commission
requests comments on:
a. the number and type of small
entities affected by the revised proposed
Rule;
b. any or all of the provisions in the
revised proposed Rule with regard to: (i)
the impact of the provision(s) (including
benefits and costs to implement and
comply with the Rule or Rule
provisions), if any; (ii) what alternatives,
if any, the Commission should consider,
as well as the costs and benefits of those
alternatives, paying specific attention to
the effect of the revised proposed Rule
on small entities;
c. ways in which the revised proposed
Rule could be modified to reduce anycosts or burdens on small entities,
including whether and how
technological developments could
further reduce the costs of
implementing and complying with the
revised proposed Rule for small entities;
d. any information quantifying the
economic costs and benefits of the
revised proposed Rule on the entities
covered, including small entities; and
e. the identity of any relevant federal,
state, or local rules that may duplicate,
overlap, or conflict with the revised
proposed Rule.
List of Subjects in 16 CFR Part 317
Trade practices.
Accordingly, for the reasons set forth
in the preamble, the Commission
proposes to amend Title 16, Chapter 1,
Subchapter C of the Code of Federal
Regulations to add a new part 317 as
follows:
PART 317-PROHIBITION OF ENERGY
MARKET MANIPULATION RULE
Sec.
317.1 Scope.
317.2 Definitions.
317.3 Prohibited practices.
317.4 Preemption.
317.5 Severability.
Authority: 42 U.S.C. 17301-17305; 15
U.S.C. 41-58.
317.1 Scope.
This part implements Subtitle B of
Title VIII of The Energy Independence
and Security Act of 2007 ("EISA"), Pub.
L. 110-140, 121 Stat. 1723 (December
19, 2007), codified at 42 U.S.C. 17301-
17305. This rule applies to any person
over which the Federal Trade
Commission has jurisdiction under the
Federal Trade Commission Act, 15
U.S.C. 41 et seq.
317.2 Definitions.
The following definitions shall apply
throughout this rule:
(a) Crude oil means any mixture of
hydrocarbons that exists:
(1) In liquid phase in natural
underground reservoirs and that
remains liquid at atmospheric pressure
after passing through separating
facilities, or
(2) As shale oil or tar sands requiring
further processing for sale as a refinery
feedstock.
(b) Gasoline means:
(1) Finished gasoline, including, but
not limited to, conventional,
reformulated, and oxygenated blends,
and
(2) Conventional and reformulated
gasoline blendstock for oxygenate
blending.
(c) Knowingly means with actual orconstructive knowledge such that the
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United States. Office of the Federal Register. Federal Register, Volume 74, Number 76, April 22, 2009, Pages 18285-18448, periodical, April 22, 2009; Washington D.C.. (https://digital.library.unt.edu/ark:/67531/metadc132938/m1/49/?rotate=90: accessed April 20, 2024), University of North Texas Libraries, UNT Digital Library, https://digital.library.unt.edu; crediting UNT Libraries Government Documents Department.